| #DVDs | dvd only | add stream | total |
|---|---|---|---|
| 1 | $7.99 | $7.99 | $15.98 |
| 2 | $11.99 | $7.99 | $19.98 |
| 3 | $15.99 | $7.99 | $23.98 |
| 4 | $21.99 | $7.99 | $29.98 |
| 5 | $27.99 | $7.99 | $35.98 |
| 6 | $32.99 | $7.99 | $40.98 |
| 7 | $37.99 | $7.99 | $45.98 |
| 8 | $43.99 | $7.99 | $51.98 |
Why did they do this? According to Wired's Epicenter blog, it has to do with the continued popularity of DVD rentals, and the need to control costs of those DVDs. Criticism is rolling in from all across the internet, from SeekingAlpha saying that "Netflix Nukes Itself", and the tons of comments on boards all across tech websites. A lot of people are threatening to quit their membership, which would obviously offset any profitability gains by raised prices.
As noted by MarketWatch, investors showed their approval initially, by pushing the stock up by as much as $3.69 earlier today, only to see its stock price drop back down to a more modest $0.53 gain. Perhaps a sign that a p/e over $84 was a bit disconcerting for some.
Here's a warning: bad timing.
The economy WILL double-dip over the next few months. The threat alone of instability with government spending means that millions are currently saving their money in anticipation of a partial government shutdown due to the government's inability to raise money to keep paying the bills.
I'm not going to be keeping the same subscription level, to be sure. I hardly use streaming because much of their content is unavailable for streaming. For me, I'm getting a $3 price cut back down to $11.99, or what it was way back a few years ago before Netflix expanded into streaming video. But come Fall and the economy dips a lot, then I'm placing my account on hold for the full 90 days allowed; if things don't improve, I'm bailing altogether.
I suspect Netflix just did an eMusic. And just like when eMusic raised prices and losing touch with its subscribers, so will Netflix face flat subscriber growth.
Update: Netflix's Facebook page is replete with angry people - which is to be expected - complaining about the price increases in the discussion boards and in response to its post on the changes made. It's very reminiscent, once again, of the eMusic price hike, where a number of people flooded (myself included) the message boards, announcing their last post before they left eMusic for good.
Update2,1:22 am west coast time: Between Netflix's Facebook and blog, they've accumulated more than 30,000 overwhelmingly negative comments. They reached the 5000 comment limit on their blog (run by Blogger) in just under 8 hours after the announcement was posted. Yep, this is going down exactly like what happened to eMusic in 2009.
Unlike a lot of the angry people, I'm not going to just drop Netflix. I do have other gripes though...like how so many of their discs have encryption which prevents me from watching movies from my computer. Today, I once again ran into this same problem, this time it was Battle: Los Angeles. The last portion of the movie froze my computer with a virus-like infinite loop routine -- thanks Netflix. Two weeks ago, I had a damaged disk where the plastic had delaminated, corrupting the written layer, and last week I had a big ole divot in one, causing it to skip the video.
Nonetheless, I'm at least sticking with them for the next month, then dropping back to the 2-DVDs only plan, to get my costs down to when I first began subscribing back in 2008. If I keep getting crap discs and they don't back down from their changes, I might eventually drop them.
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